Thursday, May 8, 2014

Norway holds rate, repeats rate steady till summer 2015

     Norway's central bank left its policy rate steady at 1.5 percent, as expected, and confirmed its guidance from March that the rate should be maintained at this level until the summer of 2015 in order for inflation to remain somewhat below, but close to the 2.5 percent target in years ahead.
    Norges Bank, which last cut its rate in March 2012, said domestic and international economic developments were broadly in line with expectations though it acknowledged that uncertainty had risen somewhat due to the conflict in Ukraine, but so far the ripple effects have been limited.
    "Market expectations with regard to key rates abroad have edged down, primarily driven by lower key rate expectations in Sweden and the euro area," the bank added.
    In Norway, bank lending and deposit rates had decreased somewhat while house price inflation had picked up again and house prices were slightly higher than predicted in March, the bank said.
    Norway's inflation rate eased to 2.0 percent in March from 2.1 percent in February.
    In its March monetary policy report the central bank forecast inflation of 2.0 percent this year and 2015, rising to 2.25 percent in 2016. It's next forecast is due in June.

    In the fourth quarter of 2013, Norway's Gross Domestic Product contracted by 0.2 percent from the third quarter for annual growth of 1.1 percent, down from a rate of 2.2 percent.
    The central bank cut its 2014 growth forecast for mainland Norway to 1.75 percent from a previous forecast of 2.0 percent in December, but maintained the 2015 forecast at 2.5 percent and 2016 forecasts at 3.0 percent.
    In March Norges Bank projected an unchanged policy rate of 1.5 percent this year, rising to 1.75 percent in 2015, 2.0 percent in 2016 and 2.50 percent in 2017.



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